Walt Pavlo (3:30)
You know, I've always thought of myself as a good guy, somebody that always did the sort of the right thing. I was raised in a Catholic family. Two good parents. I was the oldest of three sons, went to Catholic school almost my entire life. In fact, I was an altar boy at one time without incident. I'm happy to say, being the oldest, there was a lot of expected of me. And I was the first one on either side of my family to ever go to college. I got an engineering degree and an mba, and so things were going pretty well for me. At the age of 29, I moved my family, my wife and my two lovely children, two young boys, into a gated community in northern Atlanta. And there things were going pretty well. You know, I was moving up on the fast Track. And in 1992, I went to work for MCI Telecommunications. It was a great company. I moved my way up very quickly, and within three years I was a manager of a department managing about a billion dollars a month in accounts receivable. My job was a collector. Had to go out there and collect money. And this was an interesting crowd that I was collecting money from because these were customers that build their own long distance and sold it under their own brand name. Some of these companies you may have heard of before, Enron, WorldCom, Adelphia. Sounds sort of like a federal lineup today. Right. But these were good customers of MCI's. And it gets worse. Some of the other customers were a little fly by nights, you know, that just got into the long distance business because in the mid-1990s, a lot of people were just now getting into it. And some of these companies were involved in like prepaid calling cards that you see all over Manhattan now, or innovative international calling plans or 900 numbers. Andy. Pornography, gambling, fortune telling, Ms. Cleo. Somebody's got to carry Ms. Cleo's phone call. And it was left to some of the major long distance companies. And so these weren't as you might expect, not the best of business people. And what was going on is I would go out to visit some of these customers and say, you know, hey, you owe us a million dollars. Where's it at? And when I'd show up there, I'd find a laundromat, a mailboxes, et cetera, a college dorm room or an address that simply didn't exist for a company that owed us millions and millions of dollars. Well, things were going well at MCI from 1992 to 1995, which is probably why I got promoted. That they started to do bad in 1995. And this fly by night group that I've described ran up tremendous debts at mci. They were not paying their bills, they were just running off with the money. And they had run up bills of almost $200 million when I was there in 1995. And we were thinking to ourselves, how are we going to. What are we going to do about this $200 million? Shouldn't we tell the shareholders that we've got some bad news that we need to tell them about? And we discussed this within the company. And what we decided in the company was, it's a bad idea to tell the shareholders. In fact, our previous bad debt for customers that didn't pay was somewhere around $15 million. $200 million was a big number. So what we did instead was we left it to some very creative, aggressive young MBAs such as myself to hide this. To hide this $200 million. And that's exactly what we did. MBAs gone wild. MBA has gone wild. Subjectively looked at every accounting rule that was out there in the hopes of somehow masking this $200 million. And we did that. We were successful at it for about six months from late 1995 into early 1996. And then something happened to where I looked at these customers that were just running up these invoices at mci and it became disgusted and hated them. And then I became disgusted at a company that would hide this kind of stuff. And finally I became disgusted with me for being a part of it. And it weighed on me heavily. And about six months into this, I said, you know what? I've had enough. I've got to go find another job. I can't do this anymore. It's too much, you know, it's too much on me. I want to get out. I wanted to be. I wanted to quit him saying maybe I could be a reseller of long distance, you know, just like these other customers were. And I confided in a friend of mine. His name was Harold, Harold Mann. And I told Harold, you know, Harold was a very young man and very rich. And when I talked to Harold, he made a lot of sense. He had been in the telecommunications business for many years and was an entrepreneur. And when I talked to him, I said, harold, I'm very frustrated. These companies are running these tremendous debts at mci, and all I'm doing is hiding it and covering it up. And I can still remember the seemed to be so profound when I talked to Harold, because what he told me was, walt, everybody cheats. That's how you get ahead in life. He says, but what you haven't figured out is how you make money at it. You need to stay right there at mci. And he told me this idea, and I said, that's a good idea, but that's illegal. And he says, you think about it. And I did think about it, and I thought about it for months. And then I kept meeting with Harold, and we kept discussing in detail what it was going to be that we might be doing. And then finally, I can still remember, I was sitting in bed and I was laying by my wife at night, and I thought to myself, you know, should I do it or should I not do it? Should I do it or should I not do it? And I had this moment, and the moment went like this. I said, you know what? Fuck it. Fuck it. I'm going to do it. I'm going to figure this out. You know, I'm not going to fall behind on all this. I'm going to figure this thing out myself. And so I did. And this plan was very simple. All I did was hand Harold a list of customers that owed MCI money. Deadbeat customers that I had really no respect for. And Harold went out to them, and he said, you know what? I know you owe MCI a million dollars, because I'd give him the damn list. And they said, wow, it's, you know, yeah, I do owe him some money. And he said, you know, I've got a very special relationship. I'm a middleman with him. If you give me $250,000, I can negotiate that million dollars that you owe down. And they said, well, that sounds like a good idea. And they said. And Harold said, well, the only catch is you're going to send this $250,000 to banks in the Grand Cayman Islands. And these aren't the best of business people. I think I mentioned that earlier. And they go, that's a damn good idea. I Think I'll do that. So they did do that. Or they started to do that. But my job inside of MCI is I still had to make a million dollar invoice with a customer disappear. And I did that. What the hell? I've been doing it for 18 months. What's another time in doing it? But this time I was doing it for myself. And the first time we did it, $250,000 goes to the Grand Cayman Islands. I walk into MBA's gone wild, said, hey, remember that customer owed us a million dollars? They paid. They go, damn, Walt, good job. All I did was erase the debt. A little bit of my own accounting magic. The auditors never asked me, my boss never asked me. All they had to do was ask for a copy of a check and I would have been caught. But nobody asked when the news was good, they sure as hell weren't going to ask. When the news was so bad and somebody finally paid, like, oh, hell, I don't believe you. They were like, so happy. I was a hero. Within six months, we'd done this with seven different customers. And we did it again and again and again. When it was all said and done, six months later, we had $6 million in the grand Cayman Islands. I was sitting on top of the world. You might think if you read any John Grisham novels, perhaps I was happy with what I'd done. This clean getaway, the ultimate white collar crime. But I was miserable. Unlike the John Grisham novels, I was scared. I was frightened. Near a nervous breakdown. The only way to really cope with this was to drink heavily, take pills to sleep, to live with this double life that I'm living. My parents proudly introduced me at parties, saying that, you know, this is our son. He's gone to college. We're so proud of him. And meanwhile, I'm a thief. And it eats at you and it tears you apart. So I did this for a period of time, and almost like I said, I was near a nervous breakdown only after six months of doing the crime. And I'm out on business in this unstable state. And my boss calls and he says, you know what, Walt? I want to talk to you about a couple of things. Things seem to be going well. You're doing a pretty good job. But I got a. There's an accounting anomaly that's come up and I would like for you to look into it. And when he told me the name of the account, I froze because it was one of my bad deals. I had been caught. But he didn't know that I had been caught yet. So I did what anybody would do. I said, you know what? I quit. I'm not coming back to mci. Just pull the covers over my head and maybe this will all go away, right? But it didn't go away. And some months later, an internal investigation was launched. And they start talking to customers and they start talking, oh, yeah, we got this great deal in the Cayman Islands going on that wasn't what my bosses wanted to hear. And I didn't get away with it. And they take all this evidence and then they turn it over to a U.S. attorney's office and I hire an attorney. And when I'm with my attorney, we receive a letter indicating that I'm a target, the focus of a federal investigation. And when I'm doing that, I'm thinking to myself, oh, my God, how am I going to get out of this? The exit strategy is not quite working out like I thought. And now the car that I see at the end of the driveway, I wonder, is the FBI watching my moves? And the fact is that sometimes it was and sometimes it wasn't. But in my mind, it was constant. I click on the phone. Are they monitoring my phone calls? The fact is, is that sometimes they were and sometimes they were not. But in my mind, it was constant. An unexpected friend shows up. Are they recording my conversations? The fact is, is that sometimes they were and sometimes they weren't. But in my mind, it was constant. How do you live this life? What kind of a life is this for my children? What kind of life is this when I'm drinking and having pills to just sleep through the night? And finally I went on like a three day drunk binge and I end up lying on the floor in the kitchen and my wife finds me and takes me to the hospital to dry out. And I'm thinking, I can't live like this. I've got to put this behind me. The only reason I hadn't turned myself in before is because the fear of prison was. It's so tremendous. I feared for my life that there was no way that I could face doing it. Heck, the only thing I knew about prison was Shawshank Redemption and Koolan Luke. And the fact that I was blond didn't help matters either. I was scared, but I knew that I had to put this behind me. And so what I did was I went to my lawyer and I said, I want to turn myself in. And I went to the U.S. attorney's office and I pled guilty to money laundering, wire fraud, and obstruction of justice. In March of 2001, I entered federal prison in Jessup, Georgia, which just happened to be the place where Reverend Jim Baker had just left. So I would have been in good company when I entered Jessup Federal Prison, my new gated community. I had met my roommate, my cellmate. He was a young black man of about 25 years old. And I remember talking to him and he told me his sordid tale of how he got there. He said, you know what, Wald? I was doing pretty good. I dropped out of school when I was in eighth grade and I went to work selling crack cocaine on the streets of Atlanta. And by the time that I was, you know, in my early 20s, I was making about $120,000 a year. $120,000 a year is good money. And then I go, you know what? That's not bad. He said, you're damn right it's not bad. You know, only an eighth grade education. So he said, what did you do? And I said, you know, what I'm ashamed to say is I came from more of a privileged background. I should have known better. I got an engineering degree and an MBA, and I, you know, went to work at MCI Telecommunications, and I embezzled $6 million and I put it in the Grand Cayman Islands. And he looked down a bit in disgust. And then he looked his head up and he looked me in the eye and he said, you know what? Damn, I should have gone to college. I exited prison in March of 2003. Two years later, seemed like three. My wife of 15 years asked me for a divorce. I was filed for personal bankruptcy and I broke every other damn rule. So I'm probably going to break this one too. I moved in with my parents at age 40 and was penniless and started life over again. And I thought to myself, how am I ever going to get over this? How did the altar boy from so many years ago end up here? And I sat on the stoop of my parents house and I reflected back and I said, what does bad guys look like, you know, in a child's dream? Aren't they witches and demons? Or in the movies? Aren't they characters like Darth Vader or someone who wears the black cowboy hat? Or do they look like me? And I look back over my story, and in the end, I had come to the realization that the bad guy in my story was me. Thank you.
